Samsung Galaxy Note 7

Samsung SDI, the Samsung group affiliate that made batteries for the Galaxy Note 7, is having a hard time in the market.

Samsung SDI (SSDI) manufactures batteries and other electronic components for various industries. Its clients include Samsung Electronics and other sister companies, but two thirds of its revenue actually comes from non-affiliate companies including Apple.

SSDI took the brunt of the Note 7 crisis. The company was initially blamed for the slew of fire incidents that eventually forced Samsung Electronics to recall the device. Fire incidents continued even after Samsung switched to Amperex batteries, but the damage to SSDI’s reputation was already done.

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October 12, 2016

Company insiders told Reuters that several existing customers have expressed concerns about the reliability of Samsung SDI batteries. Among them, Apple, one of the biggest battery buyers in the world.

“Since the first recall, we’ve had many inquiries from our clients, including Apple, asking whether batteries used in their products are safe,” said a source at SSDI.

While Samsung SDI might be able to convince existing customers to stay, acquiring new clients may be more difficult, claim analysts cited by Reuters.

Samsung SDI’s market value decreased by around 20 percent since the Note 7 fiasco began and its Q3 operating loss doubled year-on-year.

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October 10, 2016

Unsurprisingly, the highly embarrassing affair caused some soul searching within the company: “It’s a matter of our capability … We thought we had control (over all aspects of manufacturing), but it turned out there were some aspects we weren’t able to govern,” said one Samsung SDI employee.

Samsung’s smartphone market share has taken a notable hit this year following the Galaxy Note 7 recall, but the company’s broader brand image seems to have escaped the event mostly intact, according to a Reuters/Ipsos poll. According to the data, which was collected between October 26th and November 9th, the recall has not dampened consumer appetite for Samsung smartphones and other products.

The poll pitched a variety of questions to potential smartphone customers who both had and hadn’t heard about the Galaxy Note 7 recall. 25 percent of those asked who didn’t know about the recall were considering purchasing a Samsung phone, and this result actually increases slightly to 27 percent in the group who were aware of the recall. In other words, there’s very little difference in appetite for Samsung phones between those who are and aren’t aware of the recall situation.

Furthermore, brand loyalty appears to remain high in the Samsung fan camp. Around 91 percent of current Samsung smartphone owners are likely to purchase another phone from the brand at some point, and 92 percent also say that they will likely buy another Samsung product of some sort. This compares very favourably to the Apple faithful, where 92 percent responded that there were likely to buy another iPhone, and 89 says they would buy another Apple product.

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A theory put forward by Jan Dawson of Jackdaw Research suggests that broader consumers may not view the recall too negatively because the event was mostly limited to early hardware adopters. So even though the recall may have permeated popular culture, those that weren’t directly involved in the hassle of returning handsets are still likely basing their opinions on Samsung using other factors too. Of course, we don’t know how much the recall is weighing on how consumers are going to approach future Samsung sales, and even those intending to buy one of next year’s flagships may be more hesitant to become an early adopter next time around.

While polling is far from an exact science, the results suggest that Samsung has an opportunity to bounce back from the Note 7 recall. Providing that next year’s Galaxy S8 and Note 8 can match the Note 7’s critical acclaim.

Samsung, the world’s biggest smartphone manufacturer, is probably not very happy with its performance in the third quarter of the year. Even so, according to Gartner’s latest report, the South Korean tech giant remains number one in terms of sales, as it managed to ship 71.7 million smartphones to consumers in Q3.

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However, the company has experienced the biggest year-on-year market share drop in its history – from 23.6% to 19.2%. Meanwhile, its sales have decreased by 14.2 percent when compared with the third quarter of 2015, which, again, represents the biggest drop in the company’s history.

The Note 7 fiasco is one of the reasons for Samsung’s bad quarter. But that’s not the whole story. As consumers are getting more price-conscious when looking for a new smartphone, they are increasingly turning to Chinese manufacturers for a better deal.

Looking at the sales and market share data, we can see that the China-based Huawei,Oppo, and BBK Communication Equipment have all increased their presence worldwide.

Together, these three companies accounted for 21 percent of global smartphone sales in Q3 and were the only ones in the top five ranking to increase their sales numbers as well as market shares.

Apple, on the other hand, has lost some market traction as its sales decreased by around three million units. And just like Samsung, the company also experienced a market share drop — from 13 percent (Q3 2015) to 11.5 percent (Q3 2016).

So, what do you guys think? Will Samsung be able to turn things around in the next quarter or will its sales continue to decline?